How much will I have to pay for health insurance in 2014?

If you’ve followed the discussion around health reform, you probably know that most people who don’t have employer-based coverage will be required to buy their own coverage in 2014. You may also know that subsidies will be available to help some of them afford it.

What about you? Do you know if you’ll qualify for subsidies and, if so, how much you’ll pay for coverage next year?

Beginning in 2014, federal subsidies will be made available to individuals and families earning less than 400% of the federal poverty level ($ 45,960 per year for a single person, or $ 94,200 for a family of four, in 2013 dollars). Depending on your income, these subsidies will limit your health insurance premiums to between 2% and 9.5% of your income.

Here’s a chart describing how the subsidy range will work (FPL= Federal Poverty Level).

Your Income Your Insurance Costs in 2014 Up to 133% of FPL 2% of income 133-150% of FPL 3-4% of income 150-200% of FPL 4-6.3% of income 200-250% of FPL 6.3-8.05% of income 250-300% of FPL 8.05-9.5% of income 300-400% of FPL 9.5% of income Now let’s look at a couple cost examples:

Example 1: Nancy Brown is a single woman earning $ 22,980 per year (approximately 200% of FPL). In 2014, she purchases a qualified health plan through her state exchange. The health plan she selects has a monthly premium of $ 400 per month. Thanks to the subsidies for which she qualifies, however, she will only pay a monthly premium of about $ 121 ($ 1,448 per year – that’s 6.3% of her income.). The federal subsidy covers the rest.

Example 2: The Smith family includes two parents and two children. Their annual household income is $ 83,000. In 2014 they purchase a qualified health plan through the state exchange or a state-licensed web-based entity. The plan they choose has a monthly premium of $ 1,200. Thanks to the subsidies for which the Jones family qualifies, they will pay a monthly premium of about $ 657 ($ 7,885 per year – that’s 9.5% of their household income). The federal subsidy covers the rest.

Penalties: If you opt not to buy health insurance and do not have employer-based coverage, you may face tax penalties. Tax penalties start small in 2014 and get larger over time: